"This was a record quarter to cap off a record year for Activision
Blizzard," said Bobby Kotick, Chief Executive Officer of Activision
Blizzard. "In 2017, our community reached new milestones for engagement,
our business delivered record revenues and cash flows, and we made
important progress in building future growth opportunities such as the
Overwatch League™. We couldn't be more excited for the opportunities
ahead in 2018 to continue serving our players and fans."

Financial Metrics:

Fourth Quarter

Calendar Year

Prior

(in millions, except EPS)

2017

Outlook*

2016

2017

2016

GAAP Net Revenues

$

2,043

$

1,700

$

2,014

$

7,017

$

6,608

Impact of GAAP deferralsA

$

597

$

635

$

438

$

139

$

(9

)

GAAP EPS

$

(0.77)**

$

0.10

$

0.33

$

0.36**

$

1.28

Non-GAAP EPS

$

0.49

$

0.36

$

0.65

$

2.21

$

2.18

Impact of GAAP deferralsA

$

0.45

$

0.46

$

0.27

$

0.07

$

0.02

* Prior outlook was provided by the company on November 2, 2017 in its
earnings release.** GAAP EPS includes incremental expense ($1.03
for the fourth quarter and $1.04 for the full year 2017) due to the
impact of significant discrete tax-related items, including amounts
related to changes in tax laws (including a reasonable estimate of the
impact of the Tax Cuts and Jobs Act enacted in December 2017, as
provided for in accordance with Securities and Exchange Commission
guidance), and amounts related to the potential or final resolution of
tax positions, and other unusual or unique tax-related items and
activities. Activision Blizzard will provide additional information
relating to these items in our Form 10-K for the year ending December
31, 2017.

For the year ended December 31, 2017, Activision Blizzard's net revenues
presented in accordance with GAAP were a record $7.02 billion, as
compared with $6.61 billion for 2016. GAAP net revenues from digital
channels were a record $5.48 billion. GAAP operating margin was 19%. For
the year ended December 31, 2017, Activision Blizzard recognized
approximately $1.04 per share in incremental GAAP expense due to the
impact of significant discrete tax-related items, primarily related to
the impact of the Tax Cuts and Jobs Act enacted in December 2017. GAAP
earnings per diluted share were $0.36, which would have been a record
$1.39 when adjusted to exclude significant discrete tax-related items,
as compared with $1.28 for 2016. On a non-GAAP basis, Activision
Blizzard's operating margin was 33% and earnings per diluted share were
a record $2.21, as compared with $2.18 for 2016.

For the quarter ended December 31, 2017, Activision Blizzard's net
revenues presented in accordance with GAAP were an all-quarter record
$2.04 billion, as compared with $2.01 billion for the fourth quarter of
2016. GAAP net revenues from digital channels were $1.43 billion. GAAP
operating margin was 11%. For the quarter ended December 31, 2017,
Activision Blizzard recognized approximately $1.03 per share in
incremental GAAP expense due to the impact of significant discrete
tax-related items, primarily related to the impact of the Tax Cuts and
Jobs Act enacted in December 2017. GAAP loss per share was $0.77, or
earnings per diluted share of $0.27 when adjusted to exclude significant
discrete tax-related items, as compared with earnings per diluted share
of $0.33 for the fourth quarter of 2016. On a non-GAAP basis, Activision
Blizzard's operating margin was 25% and earnings per diluted share were
$0.49, as compared with $0.65 for the fourth quarter of 2016.

Activision Blizzard generated a record $2.21 billion in operating cash
flow for the year ended December 31, 2017, as compared to $2.16 billion
for 2016. For the quarter, operating cash flows were $1.16 billion.

Please refer to the tables at the back of this press release for a
reconciliation of the company's GAAP and non-GAAP results.

Operating Metric:

Net bookings is an operating metric that is defined as the net amount of
products and services sold digitally or sold-in physically in the
period, and includes license fees, merchandise, and publisher
incentives, among others.

For the year ended December 31, 2017, Activision Blizzard's net bookingsB
were a record $7.16 billion, as compared with $6.60 billion for 2016.
Net bookingsB from digital channels were a record $5.43
billion, as compared with $5.22 billion for 2016.

For the quarter ended December 31, 2017, Activision Blizzard's net
bookingsB were an all-quarter record $2.64 billion, as
compared with $2.45 billion for the fourth quarter of 2016. Net bookingsB
from digital channels were an all-quarter record $1.62 billion, as
compared with $1.52 billion for the fourth quarter of 2016.

Selected Business Highlights:

Activision Blizzard's success in 2017 shows the enduring nature of our
franchises, and that our communities value innovation and new
experiences from our inspired teams.

Audience Reach

Activision Blizzard had 385 million Monthly Active Users (MAUs)C
in the quarter, up from 384 million last quarter.

King had 290 million MAUsC, down 1% quarter-over-quarter,
while time spent per player reached a record of 37 minutes per day.
MAUsC for the Candy CrushTMfranchise
grew slightly quarter-over-quarter while also driving increased time
spent per player.

Activision had 55 million MAUsC for the quarter, up 12%
quarter-over-quarter and matching its prior quarterly record, driven
by the successful launches of Call of Duty®:
WWII and Destiny 2. For the year, Activision had
the top two-grossing console game releases in North America and two of
the top-five grossing console game releases worldwide.1

Activision's Call of Duty: WWII was the top-grossing
console game of the year globally1, with the franchise's
biggest launch quarter sell-through on current-generation consoles.
The game set a Sony PlayStation milestone as the biggest day 1 digital
release ever.2Call of Duty has been the
number one franchise globally for 8 of the last 9 years.1

Activision and Bungie's Destiny 2 was the
second-highest-grossing console game in North America for the year1,
had the largest PC launch in Activision history based on units, and
had a higher attach rate on its first expansion than Destiny 1.

Blizzard had 40 million MAUsC for the quarter. While down
sequentially, this is the 6th quarter in a row with 40
million or more MAUsC, primarily driven by Overwatch®
and Hearthstone®.

Deep Engagement

For the second quarter in a row, players spent over 50 minutes per day
in Activision, Blizzard, and King games, in line with some of the most
engaging online connected platforms in the world.

The inaugural season of the Overwatch Leaguestarted on January
10 with 12 world-class team owners from across the globe, multiple
league and team-level sponsors, a premium viewing experience and a
robust distribution strategy. In its first week, the Overwatch
Leaguereached more than 10 million unique viewers across the
world with an average audience of more than 280,000 on a per minute
basis.

The Call of Duty World League, which kicked off in December,
has sold out each of its World League Global Open events. The launch
event in Dallas had more than double the viewership hours of last
year's launch event.

Player Investment

Activision Blizzard delivered a fourth-quarter record of over $1
billion of in-game net bookingsB, and an annual record of
over $4 billion of in-game net bookingsB.

King grew segment revenues and operating income year-over-year,
delivered record mobile net bookingsB in 2017, and
increased its average net bookingsB per paying user by a
double-digit percentage year-over-year. This quarter, King had two of
the top-10 highest-grossing titles in the U.S. mobile app stores for
the seventeenth quarter in a row, with Candy Crush Saga™
and Candy Crush Soda SagaTM at
#1 and #2, respectively.3 The Candy Crush franchise
grew consumer spend sequentially for the fourth quarter in a row.

Activision delivered record segment operating income of over $1
billion with record operating margin of 38%. Activision offered
compelling downloadable content offerings, including Zombies
Chronicles for Call of Duty: Black Ops III, Destiny
2's expansion pass, Call of Duty: WWII's season
pass, and additional live features, services and content.

Blizzard delivered record segment revenues and operating income for a
year with no major game release, as they continued to deliver
continuous content across franchises including Overwatch,
Hearthstone, and World of Warcraft®.

Company Outlook:

(in millions, except EPS)

GAAP Outlook

Non-GAAP Outlook

Impact of GAAP deferralsA

CY 2018

Net Revenues

$

7,350

$

7,350

$

100

EPS

$

1.78

$

2.45

$

0.05

Fully Diluted Shares

776

776

Q1 2018

Net Revenues

$

1,820

$

1,820

$

(540

)

EPS

$

0.47

$

0.65

$

(0.34

)

Fully Diluted Shares

771

771

Net bookingsB(operating metric) is expected to
be $7.45 billion for 2018 and $1.28 billion for the first quarter of
2018.

Currency Assumptions for 2018 Outlook:

$1.20 USD/Euro for current outlook (vs. average of $1.12 for 2017 and
$1.11 for 2016); and

$1.37 USD/British Pound Sterling for current outlook (vs. average of
$1.30 for 2017 and $1.36 for 2016).

The Board of Directors declared a cash dividend of $0.34 per common
share, payable on May 9, 2018 to shareholders of record at the close of
business on March 30, 2018, which represents a 13% increase from 2017.
Additionally, the Board of Directors authorized over $1 billion of
further debt paydown during 2018.

Conference Call:

Today at 4:30 p.m. EST, Activision Blizzard's management will host a
conference call and Webcast to discuss the company's results for the
quarter ended December 31, 2017 and management's outlook for the
remainder of the calendar year. The company welcomes all members of the
financial and media communities and other interested parties to visit
the "Investor Relations" area of www.activisionblizzard.com
to listen to the conference call via live Webcast or to listen to the
call live by dialing into888-515-2235 in the U.S. with passcode
1423198.

About Activision Blizzard:

Activision Blizzard, Inc., a member of the Fortune 500 and S&P 500, is
the world's most successful standalone interactive entertainment
company. We delight hundreds of millions of monthly active users around
the world through franchises including Activision's Call of Duty®,
Destiny and Skylanders®, Blizzard Entertainment'sWorld
of Warcraft®, Overwatch®, Hearthstone®, Diablo®,
StarCraft®, and Heroes of the Storm®, and King's Candy
Crush™, Bubble Witch™, and Farm Heroes™. The company
is one of the Fortune "100 Best Companies To Work For®." Headquartered
in Santa Monica, California, Activision Blizzard has operations
throughout the world, and its games are played in 196 countries. More
information about Activision Blizzard and its products can be found on
the company's website, www.activisionblizzard.com.

Please see the "Investor Relations" area of www.activisionblizzard.com
for answers to frequently asked questions regarding the upcoming
adoption in the first quarter of 2018 of ASC 606, a new accounting
standard related to GAAP revenue recognition.

1 Based on data from the NPD Group, GfK, GSD and internal
estimates.2 Based on blog.us.playstation.com.3U.S. ranking for Apple App Store and Google Play Store combined, per App
Annie Intelligence for fourth quarter 2017.

A Net effect of accounting treatment from revenue deferrals
on certain of our online enabled products. Some of our games' online
functionality represents an essential component of gameplay and, as a
result, a more-than-inconsequential separate deliverable. As a result,
we recognize revenues attributed to these game titles over their
estimated service periods, which is generally less than a year. The
related cost of revenues is deferred and recognized as an expense as the
related revenues are recognized. Impact from changes in deferrals refers
to the net effect from revenue deferrals accounting treatment for the
purposes of revenues, along with, for the purposes of EPS, the related
cost of revenues deferrals treatment and the related tax impacts.
Internally, management excludes the impact of this change in deferred
revenues and related cost of revenues when evaluating the company's
operating performance, when planning, forecasting and analyzing future
periods, and when assessing the performance of its management team.
Management believes this is appropriate because doing so enables an
analysis of performance based on the timing of actual transactions with
our customers. In addition, management believes excluding the change in
deferred revenues and the related cost of revenues provides a much more
timely indication of trends in our operating results.

BNet bookings is an operating metric that is defined
as the net amount of products and services sold digitally or sold-in
physically in the period, and includes license fees, merchandise, and
publisher incentives, among others.

CMonthly Active User ("MAU") Definition: We monitor
MAUs as a key measure of the overall size of our user base. MAUs are the
number of individuals who accessed a particular game in a given month.
We calculate average MAUs in a period by adding the total number of MAUs
in each of the months in a given period and dividing that total by the
number of months in the period. An individual who accesses two of our
games would be counted as two users. In addition, due to technical
limitations, for Activision and King, an individual who accesses the
same game on two platforms or devices in the relevant period would be
counted as two users. For Blizzard, an individual who accesses the same
game on two platforms or devices in the relevant period would generally
be counted as a single user.

Non-GAAP Financial Measures: As a supplement to our financial
measures presented in accordance with Generally Accepted Accounting
Principles ("GAAP"), Activision Blizzard presents certain non-GAAP
measures of financial performance. These non-GAAP financial measures are
not intended to be considered in isolation from, as a substitute for, or
as more important than, the financial information prepared and presented
in accordance with GAAP. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the items associated with
the company's results of operations as determined in accordance with
GAAP.

Activision Blizzard provides net income (loss), earnings (loss) per
share, and operating margin data and guidance both including (in
accordance with GAAP) and excluding (non-GAAP) certain items. When
relevant, the company also provides constant FX information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. In addition,
Activision Blizzard provides EBITDA (defined as GAAP net income (loss)
before interest (income) expense, income taxes, depreciation and
amortization) and adjusted EBITDA (defined as non-GAAP operating margin
(see non-GAAP financial measure below) before depreciation). The
non-GAAP financial measures exclude the following items, as applicable
in any given reporting period and our outlook:

expenses related to stock-based compensation;

the amortization of intangibles from purchase price accounting;

fees and other expenses related to the King acquisition, inclusive of
related debt financings, and refinancing of long-term debt, including
penalties and the write off of unamortized discount and deferred
financing costs;

restructuring charges;

other non-cash charges from reclassification of certain cumulative
translation adjustments into earnings as required by GAAP;

the income tax adjustments associated with any of the above items (tax
impact on non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the
results); and

significant discrete tax-related items, including amounts related to
changes in tax laws (including the Tax Cuts and Jobs Act enacted in
December 2017), amounts related to the potential or final resolution
of tax positions, and other unusual or unique tax-related items and
activities.

In the future, Activision Blizzard may also consider whether other items
should also be excluded in calculating the non-GAAP financial measures
used by the company. Management believes that the presentation of these
non-GAAP financial measures provides investors with additional useful
information to measure Activision Blizzard's financial and operating
performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better
understand the operating results of Activision Blizzard by excluding
certain items that may not be indicative of the company's core business,
operating results, or future outlook. Additionally, we consider
quantitative and qualitative factors in assessing whether to adjust for
the impact of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial measures,
along with others, in assessing the company's operating results, and
measuring compliance with the requirements of the company's debt
financing agreements, as well as in planning and forecasting.

Activision Blizzard's non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and the terms
non-GAAP net income, non-GAAP earnings per share, non-GAAP operating
margin, and non-GAAP or adjusted EBITDA do not have a standardized
meaning. Therefore, other companies may use the same or similarly named
measures, but exclude different items, which may not provide investors a
comparable view of Activision Blizzard's performance in relation to
other companies.

Management compensates for the limitations resulting from the exclusion
of these items by considering the impact of the items separately and by
considering Activision Blizzard's GAAP, as well as non-GAAP, results and
outlook, and by presenting the most comparable GAAP measures directly
ahead of non-GAAP measures, and by providing a reconciliation that
indicates and describes the adjustments made.

Cautionary Note Regarding Forward-looking Statements: The
statements contained herein that are not historical facts are
forward-looking statements, including, but not limited to, statements
about: (1) projections of revenues, expenses, income or loss, earnings
or loss per share, cash flow or other financial items; (2) statements of
our plans and objectives, including those related to releases of
products and services; (3) statements of future financial or operating
performance, including the impact of tax items thereon; and (4)
statements of assumptions underlying such statements. The company
generally uses words such as "outlook," "forecast," "will," "could,"
"should," "would," "to be," "plan," "plans," "believes," "may," "might,"
"expects," "intends," "intends as," "anticipates," "estimate," "future,"
"positioned," "potential," "project," "remain," "scheduled," "set to,"
"subject to," "upcoming," and other similar expressions to help identify
forward-looking statements. Forward-looking statements are subject to
business and economic risks, reflect management's current expectations,
estimates and projections about our business, and are inherently
uncertain and difficult to predict.

The company cautions that a number of important factors could cause
Activision Blizzard's actual future results and other future
circumstances to differ materially from those expressed in any
forward-looking statements. Such factors include, but are not limited
to: sales levels of Activision Blizzard's titles, products and services;
concentration of revenue among a small number of titles; Activision
Blizzard's ability to predict consumer preferences, including interest
in specific genres, and preferences among platforms; the diversion of
management time and attention to issues relating to the operations of
our acquired or newly started businesses; the amount of our debt and the
limitations imposed by the covenants in the agreements governing our
debt; the adoption rate and availability of new hardware (including
peripherals) and related software; counterparty risks relating to
customers, licensees, licensors and manufacturers; maintenance of
relationships with key personnel, customers, financing providers,
licensees, licensors, manufacturers, vendors, and third-party
developers, including the ability to attract, retain and develop key
personnel and developers that can create high-quality titles, products
and services; risks relating to the expansion into new businesses,
including the potential impact on our existing businesses; changing
business models within the video game industry, including digital
delivery of content and the increased prevalence of free-to-play games;
product delays or defects; competition, including from other forms of
entertainment; rapid changes in technology and industry standards;
possible declines in software pricing; product returns and price
protection; the identification of suitable future acquisition
opportunities and potential challenges associated with geographic
expansion; the seasonal and cyclical nature of the interactive
entertainment market; the outcome of current or future tax disputes;
litigation risks and associated costs; protection of proprietary rights;
shifts in consumer spending trends; capital market risks; the impact of
applicable regulations; domestic and international economic, financial
and political conditions and policies; tax rates and foreign exchange
rates; the impact of the current macroeconomic environment; and the
other factors identified in "Risk Factors" included in Part I, Item 1A
of our Annual Report on Form 10-K for the year ended December 31, 2016.

The forward-looking statements in this press release are based on
information available to the company at this time and we assume no
obligation to update any such forward-looking statements. Although these
forward-looking statements are believed to be true when made, they may
ultimately prove to be incorrect. These statements are not guarantees of
our future performance and are subject to risks, uncertainties and other
factors, some of which are beyond our control and may cause actual
results to differ materially from current expectations.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in millions, except per share data)

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

Net revenues

Product sales

$

737

$

696

$

2,110

$

2,196

Subscription, licensing, and other revenues1

1,306

1,318

4,907

4,412

Total net revenues

2,043

2,014

7,017

6,608

Costs and expenses

Cost of revenues—product sales:

Product costs

310

313

733

741

Software royalties, amortization, and intellectual property licenses

101

80

300

331

Cost of revenues—subscription, licensing, and other:

Game operations and distribution costs

268

230

984

851

Software royalties, amortization, and intellectual property licenses

124

153

484

471

Product development

318

285

1,069

958

Sales and marketing

479

380

1,378

1,210

General and administrative

222

148

760

634

Total costs and expenses

1,822

1,589

5,708

5,196

Operating income

221

425

1,309

1,412

Interest and other expense (income), net

36

43

146

214

Loss on extinguishment of debt

—

82

12

92

Income before income tax expense

185

300

1,151

1,106

Income tax expense

769

46

878

140

Net income (loss)

$

(584

)

$

254

$

273

$

966

Basic earnings (loss) per common share

$

(0.77

)

$

0.34

$

0.36

$

1.30

Weighted average common shares outstanding

757

744

754

740

Diluted earnings (loss) per common share

$

(0.77

)

$

0.33

$

0.36

$

1.28

Weighted average common shares outstanding assuming dilution

757

757

766

754

1

Subscription, licensing, and other revenues represent revenues from
World of Warcraft subscriptions, licensing royalties from our
products and franchises, value-added services, downloadable content,
microtransactions, and other miscellaneous revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

December 31, 2017

December 31, 2016

Assets

Current assets

Cash and cash equivalents

$

4,713

$

3,245

Accounts receivable, net

918

732

Inventories, net

46

49

Software development

367

412

Other current assets

476

392

Total current assets

6,520

4,830

Software development

86

54

Property and equipment, net

294

258

Deferred income taxes, net

459

283

Other assets

489

401

Intangible assets, net

1,106

1,858

Goodwill

9,763

9,768

Total assets

$

18,717

$

17,452

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable

$

323

$

222

Deferred revenues

1,929

1,628

Accrued expenses and other liabilities

1,411

806

Total current liabilities

3,663

2,656

Long-term debt, net

4,390

4,887

Deferred income taxes, net

21

44

Other liabilities

1,181

746

Total liabilities

9,255

8,333

Shareholders' equity

Common stock

—

—

Additional paid-in capital

10,747

10,442

Treasury stock

(5,563

)

(5,563

)

Retained earnings

4,916

4,869

Accumulated other comprehensive loss

(638

)

(629

)

Total shareholders' equity

9,462

9,119

Total liabilities and shareholders' equity

$

18,717

$

17,452

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in millions)

Year Ended December 31,

2017

2016

Cash flows from operating activities:

Net income

$

273

$

966

Adjustments to reconcile net income to net cash provided by
operating activities:

Deferred income taxes

(181

)

(9

)

Provision for inventories

33

42

Depreciation and amortization

888

829

Amortization of capitalized software development costs and
intellectual property licenses1

311

321

Premium payment for early redemption of note

—

63

Amortization of debt discount, financing costs, and non-cash
write-off due to extinguishment of debt

24

50

Share-based compensation expense2

176

147

Other

28

4

Changes in operating assets and liabilities, net of effect from
business acquisitions:

Reflects fees and other expenses related to the acquisition of King
Digital Entertainment ("King Acquisition"), inclusive of related
debt financings and integration costs.

4

Reflects restructuring charges, primarily severance costs.

5

Reflects the impact of significant discrete tax-related items,
including amounts related to changes in tax laws (including a
reasonable estimate of the impact of the Tax Cuts and Jobs Act
enacted in December 2017, as provided for in accordance with
Securities and Exchange Commission guidance), amounts related to
the potential or final resolution of tax positions, and/or other
unusual or unique tax-related items and activities. Activision
Blizzard will provide additional information in our forthcoming
Form 10-K for the year ending December 31, 2017.

6

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

7

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the
results.

The GAAP and non-GAAP earnings per share information is presented as
calculated. The sum of these measures, as presented, may differ due to
the impact of rounding.

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects restructuring charges, primarily severance costs.

5

Reflects a non-cash accounting charge to reclassify certain
cumulative translation (gains) losses into earnings due to the
substantial liquidation of certain of our foreign entities.

6

Reflects the impact of significant discrete tax-related items,
including amounts related to changes in tax laws (including a
reasonable estimate of the impact of the Tax Cuts and Jobs Act
enacted in December 2017, as provided for in accordance with
Securities and Exchange Commission guidance), amounts related to
the potential or final resolution of tax positions, and/or other
unusual or unique tax-related items and activities. Activision
Blizzard will provide additional information in our forthcoming
Form 10-K for the year ending December 31, 2017.

7

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

8

Reflects the loss on extinguishment of debt from refinancing
activities.

9

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the
results.

The GAAP and non-GAAP earnings per share information is presented as
calculated. The sum of these measures, as presented, may differ due to
the impact of rounding.

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the loss on extinguishment of debt from refinancing
activities.

6

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the
results.

The GAAP and non-GAAP earnings per share information is presented as
calculated. The sum of these measures, as presented, may differ due to
the impact of rounding.

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the loss on extinguishment of debt from refinancing
activities.

6

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the
results.

The GAAP and non-GAAP earnings per share information is presented as
calculated. The sum of these measures, as presented, may differ due to
the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

NET REVENUES BY DISTRIBUTION CHANNEL

For the Three Months and Year Ended December 31, 2017 and 2016

(Amounts in millions)

Three Months Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Distribution Channel

Digital online channels2

$

1,431

70

%

$

1,454

72

%

$

(23

)

(2

)%

Retail channels

335

16

372

18

(37

)

(10

)

Other3

277

14

188

9

89

47

Total consolidated net revenues

$

2,043

100

%

$

2,014

100

%

$

29

1

Change in deferred revenues4

Digital online channels2

$

184

$

61

Retail channels

417

369

Other3

(4

)

8

Total changes in deferred revenues

$

597

$

438

Year Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Distribution Channel

Digital online channels2

$

5,479

78

%

$

4,865

74

%

$

614

13

%

Retail channels

1,033

15

1,386

21

(353

)

(25

)

Other3

505

7

357

5

148

41

Total consolidated net revenues

$

7,017

100

%

$

6,608

100

%

$

409

6

Change in deferred revenues4

Digital online channels2

$

(53

)

$

351

Retail channels

210

(368

)

Other3

(18

)

8

Total changes in deferred revenues

$

139

$

(9

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

Net revenues from Other include revenues from our studios and
distribution businesses, as well as revenues from Major League
Gaming and the Overwatch League.

4

Reflects the net effect from deferral of revenues and
(recognition) of deferred revenues on certain of our online
enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

NET REVENUES BY PLATFORM

For the Three Months and Year Ended December 31, 2017 and 2016

(Amounts in millions)

Three Months Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Platform

Console

$

679

33

%

$

586

29

%

$

93

16

%

PC

508

25

704

35

(196

)

(28

)

Mobile and ancillary2

579

28

536

27

43

8

Other3

277

14

188

9

89

47

Total consolidated net revenues

$

2,043

100

%

$

2,014

100

%

$

29

1

Change in deferred revenues4

Console

$

520

$

499

PC

86

(68

)

Mobile and ancillary2

(5

)

(1

)

Other3

(4

)

8

Total changes in deferred revenues

$

597

$

438

Year Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Platform

Console

$

2,389

34

%

$

2,453

37

%

$

(64

)

(3

)%

PC

2,042

29

2,124

32

(82

)

(4

)

Mobile and ancillary2

2,081

30

1,674

25

407

24

Other3

505

7

357

5

148

41

Total consolidated net revenues

$

7,017

100

%

$

6,608

100

%

$

409

6

Change in deferred revenues4

Console

$

210

$

(184

)

PC

(67

)

135

Mobile and ancillary2

14

32

Other3

(18

)

8

Total changes in deferred revenues

$

139

$

(9

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

2

Net revenues from Mobile and ancillary include revenues from mobile
devices, as well as non-platform specific game related revenues such
as standalone sales of toys and accessories from the Skylanders
franchise and other physical merchandise and accessories.

3

Net revenues from Other include revenues from our studios and
distribution businesses, as well as revenues from Major League
Gaming and the Overwatch League.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

NET REVENUES BY GEOGRAPHIC REGION

For the Three Months and Year Ended December 31, 2017 and 2016

(Amounts in millions)

Three Months Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Geographic Region

Americas

$

1,021

50

%

$

1,012

50

%

$

9

1

%

EMEA2

780

38

693

34

87

13

Asia Pacific

242

12

309

15

(67

)

(22

)

Total consolidated net revenues

$

2,043

100

%

$

2,014

100

%

$

29

1

Change in deferred revenues3

Americas

$

333

$

275

EMEA2

247

163

Asia Pacific

17

—

Total changes in deferred revenues

$

597

$

438

Year Ended

December 31, 2017

December 31, 2016

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Geographic Region

Americas

$

3,607

51

%

$

3,423

52

%

$

184

5

%

EMEA2

2,464

35

2,221

34

243

11

Asia Pacific

946

13

964

15

(18

)

(2

)

Total consolidated net revenues

$

7,017

100

%

$

6,608

100

%

$

409

6

Change in deferred revenues3

Americas

$

75

$

(32

)

EMEA2

88

(13

)

Asia Pacific

(24

)

36

Total changes in deferred revenues

$

139

$

(9

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

2

Consists of the Europe, Middle East, and Africa geographic regions.

3

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

OPERATING SEGMENTS INFORMATION

For the Three Months and Year Ended December 31, 2017 and 2016

(Amounts in millions)

Three Months Ended:

December 31, 2017

December 31, 2016

$ Increase / (Decrease)

% Increase / (Decrease)

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Segment Revenues

Net revenues from external customers

$

1,337

$

580

$

516

$

2,433

$

1,151

$

672

$

436

$

2,259

$

186

$

(92

)

$

80

$

174

16

%

(14

)%

18

%

8

%

Intersegment net revenues1

—

19

—

19

—

—

—

—

—

19

—

19

—

—

—

—

Segment net revenues

$

1,337

$

599

$

516

$

2,452

$

1,151

$

672

$

436

$

2,259

$

186

$

(73

)

$

80

$

193

16

(11

)

18

9

Segment operating income

$

634

$

160

$

162

$

956

$

479

$

265

$

156

$

900

$

155

$

(105

)

$

6

$

56

32

%

(40

)%

4

%

6

%

Operating Margin from Total Reportable Segments

39.0

%

39.8

%

Year Ended:

December 31, 2017

December 31, 2016

$ Increase / (Decrease)

% Increase / (Decrease)

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Activision

Blizzard

King

Total

Segment Revenues

Net revenues from external customers

$

2,628

$

2,120

$

1,998

$

6,746

$

2,220

$

2,439

$

1,586

$

6,245

$

408

$

(319

)

$

412

$

501

18

%

(13

)%

26

%

8

%

Intersegment net revenues1

—

19

—

19

—

—

—

—

—

19

—

19

—

—

—

—

Segment net revenues

$

2,628

$

2,139

$

1,998

$

6,765

$

2,220

$

2,439

$

1,586

$

6,245

$

408

$

(300

)

$

412

$

520

18

(12

)

26

8

Segment operating income

$

1,005

$

712

$

700

$

2,417

$

788

$

995

$

537

$

2,320

$

217

$

(283

)

$

163

$

97

28

%

(28

)%

30

%

4

%

Operating Margin from Total Reportable Segments

35.7

%

37.1

%

1

Intersegment revenues reflect licensing and service fees charged
between segments.

Our operating segments are consistent with the manner in which our
operations are reviewed and managed by our Chief Executive Officer, who
is our chief operating decision maker ("CODM"). The CODM reviews segment
performance exclusive of: the impact of the change in deferred revenues
and related cost of revenues with respect to certain of our
online-enabled games; share-based compensation expense; amortization of
intangible assets as a result of purchase price accounting; fees and
other expenses (including legal fees, costs, expenses and accruals)
related to acquisitions, associated integration activities, and
financings; certain restructuring costs; and other non-cash charges. See
the following page for the reconciliation tables of segment revenues and
operating income to consolidated net revenues and consolidated operating
income.

Our operating segments are also consistent with our internal
organization structure, the way we assess operating performance and
allocate resources, and the availability of separate financial
information. Due to change in our internal organization and reporting
structure and how we manage the business, commencing with the second
quarter of 2017, our Major League Gaming business, which was previously
included in Other segments, is now included in the Blizzard segment. We
have also revised prior periods to reflect this change. We do not
aggregate operating segments.

Includes other income and expenses from operating segments managed
outside the reportable segments, including our studios and
distribution businesses. Also includes unallocated corporate income
and expenses.

2

Reflects the net effect from (deferral) of revenues and recognition
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products.

3

Intersegment revenues reflect licensing and service fees charged
between segments.

4

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

5

Reflects restructuring charges, primarily severance costs.

6

Reflects a non-cash accounting charge to reclassify certain
cumulative translation gains (losses) into earnings due to the
substantial liquidation of certain of our foreign entities.

7

Reflects the impact of other unusual or unique tax-related items and
activities.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

EBITDA AND ADJUSTED EBITDA

For the Trailing Twelve Months Ended December 31, 2017

(Amounts in millions)

Trailing TwelveMonths Ended

March 31,2017

June 30,2017

September 30,2017

December 31, 2017

December 31, 2017

GAAP Net Income (Loss)1

$

426

$

243

$

188

$

(584

)

$

273

Interest and other expense (income), net

40

34

37

36

146

Loss on extinguishment of debt

—

12

—

—

12

Provision for income taxes1

27

50

32

769

878

Depreciation and amortization

224

226

220

219

888

EBITDA

717

565

477

440

2,197

Share-based compensation expense2

33

39

47

58

178

Fees and other expenses related to the King Acquisition3

4

5

3

3

15

Restructuring costs4

11

—

—

5

15

Other non-cash charges5

16

(1

)

(1

)

—

14

Discrete tax-related items6

—

—

—

39

39

Adjusted EBITDA

$

781

$

608

$

526

$

545

$

2,458

Change in deferred net revenues and related cost of revenues7

$

(396

)

$

(105

)

$

132

$

441

$

71

1

We recognized $69 million, $13 million, $15 million, and $15
million of excess tax benefits from share-based payments as an
income tax benefit in the provision for income taxes for the three
months ended March 31, June 30, September 30, and December 31,
2017, respectively. Provision for income taxes for the three
months ended December 31, 2017 also includes an impact from
significant discrete tax-related items, including amounts related
to changes in tax laws (including a reasonable estimate of the
impact of the Tax Cuts and Jobs Act enacted in December 2017, as
provided for in accordance with Securities and Exchange Commission
guidance), amounts related to the potential or final resolution of
tax positions, and/or other unusual or unique tax-related items
and activities.

2

Includes expenses related to share-based compensation.

3

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects restructuring charges, primarily severance costs.

5

Reflects a non-cash accounting charge to reclassify certain
cumulative translation (gains) losses into earnings due to the
substantial liquidation of certain of our foreign entities.

6

Reflects the impact of other unusual or unique tax-related items and
activities.

7

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products.

Trailing twelve months amounts are presented as calculated. Therefore,
the sum of the four quarters, as presented, may differ due to the impact
of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

Outlook for the Three Months Ending March 31, 2018 and Year
Ending December 31, 2018

GAAP to Non-GAAP Reconciliation

(Amounts in millions, except per share data)

Outlook for the

Outlook for the

Three Months Ending

Year Ending

March 31, 2018

December 31, 2018

Net Revenues1

$

1,820

$

7,350

Change in deferred revenues2

$

(540

)

$

100

Earnings Per Diluted Share (GAAP)

$

0.47

$

1.78

Excluding the impact of:

Share-based compensation3

0.07

0.32

Amortization of intangible assets4

0.15

0.47

Loss on extinguishment of debt5

—

0.05

Income tax impacts from items above6

(0.05

)

(0.17

)

Earnings Per Diluted Share (Non-GAAP)

$

0.65

$

2.45

Net effect of deferred net revenues and related cost of revenues
on Earnings Per Diluted Share7

$

(0.34

)

$

0.05

1

Net Revenues represents the revenue outlook for both GAAP and
Non-GAAP as they are measured the same.

2

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

3

Reflects expenses related to share-based compensation.

4

Reflects amortization of intangible assets from purchase price
accounting, including intangible assets from the King Acquisition.

5

Reflects losses to be recognized from early extinguishments of debt.

6

Reflects the income tax impacts associated with the above items. Due
to the inherent uncertainties in share price and option exercise
behavior, we do not generally forecast excess tax benefits or tax
shortfalls.

7

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.

The per share adjustments and the GAAP and Non-GAAP earnings per share
information are presented as calculated. Therefore the sum of these
measures, as presented, may differ due to the impact of rounding.

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